USA – The British multinational alcoholic beverages company has agreed the sale of nineteen brands to a privately held American alcoholic beverage company, Sazerac for a consideration of US$550 million.
Diageo has also entered into long-term supply contracts with Sazerac on completion for five of the brands each for a period of ten years.
Supply of all other brands will transition to Sazerac within a one-year period from completion.
The transaction, which is subject to regulatory approval, is expected to complete early in 2019.
The brands included in the transaction are Seagram’s VO, Seagram’s 83, Seagram’s Five Star, Myers’s, Parrot Bay, Romana Sambuca, Popov, Yukon Jack, Goldschlager, Stirrings, The Club, Scoresby, Black Haus, Peligroso, Relska, Grind, Piehole, Booth’s and John Begg.
“Diageo has a clear strategy to deliver consistent efficient growth and value creation for our shareholders.
This includes a disciplined approach to allocating resources and capital to ensure we maximise returns over time.
Today’s announcement is another example of this strategy in action.
The disposal of these brands enables us to have even greater focus on the faster growing premium and above brands in the US spirits portfolio,” said Ivan Menezes, Chief Executive of Diageo.
According to the company, net proceeds of approximately US$382 million (£340 million), after tax and transaction costs, will be returned to shareholders through a share repurchase following completion.
Plans by Diageo to sell off its US-focused spirits brands were publicized in May this year as the company looks to focus on its premium spirits brands portfolio.
A Diageo spokesperson revealed that such a move was geared towards maximizing shareholder value.
The company which owns Johnnie Walker, Guinness and Baileys recorded US$14.24 billion in net sales in its 2018 preliminary results released in July.
In its half-year results, the company saw a net sales growth of 2% in North America and a 3% sales boost in its US Spirits division.
Last year Diageo said it expects to deliver £500 million (US$562 million) in savings by the end of 2019, along with a considerable improvement in its organic margins.
